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College Planning for the Rich

Not even affluent clients need to pay full price for college if they know the right people.

David J. Drucker, 08/17/2006

The average planner tells a client with children to educate that they should invest in a Section 529 Plan or open a Coverdell Education Account.  The above-average planner shows a family how to reposition its assets so as to lower the expected family contribution to education costs and qualify a child for financial aid.

But what kind of planner knows what to do when a client is too affluent to qualify for financial aid and hasn't saved for upcoming tuition payments?  Sure, maybe they can afford to pay full price but that may entail liquidating securities with gains and paying taxes, as well.  If you advise the wealthy, then you should have a few tricks up your sleeve for occasions like this.

Deborah Fox does.  Fox, the founder of Fox College Funding LLC in San Diego, CA, has almost single-handedly brought this mode of college planning to the our profession.  If niche practices are good for survival, then Fox's skills should ensure her survival in the industry for a long time.  But how did she discover and exploit this particular niche?

As often happens, it was a combination of longevity in the industry and accident.  "This is my 23rd year in financial services," says Fox.  "I started doing general financial planning and then, in 1991, focused on college needs when a couple of comprehensive planning clients asked me how to better prepare for upcoming tuition bills.  Both clients, says Fox, had high school juniors soon to be in college and I had nothing compelling to tell them, which frustrated me."

Fox then realized she'd never been exposed to the tactics needed to fit these clients' circumstances, so she started doing her research and pieced together the various strategies that now make up her toolkit.  "I was floored by how much could be done, and I started adding this service for all my clients."

When Fox casually mentioned to her local study group the work she'd been doing, they requested she do a continuing ed session for them.  She did, and it was enthusiastically received.  "They started talking about me in the community and referred clients to me, local media started coming to me, and it just mushroomed from there."

All of which put Fox at a crossroads where she had to decide whether to continue business as usual or specialize in this new niche.  "It was becoming lucrative, so we decided to build the practice more in this area."  What gave her a final push was her new broker-dealer: Securities America.  "I had just left my old BD and Securities America had already identified college planning for the affluent as a niche they wanted to do something with.  So they asked if I would make my program available nationally to all Securities America advisors." It took her two years, but Fox developed the turnkey system Securities America had requested and now trains and supports 60 other advisors in her planning niche.

Before we go too far down this road, though, what exactly is it that Fox does for clients?  "What I have aren't trade secrets, exactly, but dozens of strategies that can be pulled from in the right combination to fit a particular family's profile.  We interview the family, understand their needs and wants as to educating their children, and then come up with something customized."

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